India July Wholesale Prices Contract At Slower Pace, Food Turns Costlier

Friday,   14-Aug-2020   12:36 PM (IST)

India’s wholesale prices contracted for the fourth straight month through July, but the pace eased from the previous month as food prices turned higher, government data showed today. Wholesale prices contracted 0.58% on year in July. It was narrower than a median forecast of a 1% annual contraction according to a Reuters poll of economists and also eased from 1.81% fall in June. Wholesale food index rose to 4.32% in July from 3.05% expansion in the previous month. Wholesale prices of essential food items such as vegetables rebounded 8.20% in July from the earlier month’s 9.21% annual pace of contraction. Wholesale potato prices jumped 69.07% in July, as compared with a 56.20% rise in June. Onion prices dropped 25.56% in July, versus a 15.27% contraction last month. Food prices have spiked in recent months as the nationwide lockdown to contain the spread of coronavirus hurt supply chains. The government has lifted most lockdown norms from June, but several parts of the country still have certain restrictions in place as virus infections are rising. Wholesale prices of pulses rose 10.24%, up from 10.10% rise in June. Milk prices rose 4.61%, faster than a 4.05% pace of gain in the previous month. Wholesale prices of manufactured products, which has a 64.23% weightage in the WPI, rose 0.51% from a year earlier in July, the pace quickening from an annual 0.08% expansion in June. Fuel and power costs fell 9.84% from a year earlier in July, the pace slowing from a 13.60% annual contraction in June. Crude oil prices, India’s costliest import, rose for a fourth month in July. Brent crude, a global marker for prices, closed 5.22% higher in July and hit a four-month high of $44.89 per barrel during the month. India imports almost 85% of its crude oil requirements. The government revised May’s wholesale annual inflation reading to 3.37% annual contraction from an initial estimate of 3.21% fall. Today’s data are provisional and can be revised later.